While Queensland may be the sunshine state and Victoria on the move, New South Wales is certainly the premier state, at least when it comes to recent economic performance.
Yes, Australia’s most populous state – the largest economy in the country – continued to outperform during the September quarter, standing head-and-shoulders above others according to the latest Stateometer released by the ANZ.
The ANZ Stateometer, a measure of economic performance across Australia’s states and territories, uses 16 economic indicators that cover labour market conditions, household and business activity to provide a timely pulse of economic activity across the nation.
The plot chart below, supplied by ANZ, is broken down into four quadrants. The states and territories in the top right quadrant are deemed to be growing above their trend economic growth rate with activity continuing to accelerate. At the other end of the spectrum, those in the bottom left quadrant are growing below trend, and are decelerating based on recent data.
Clearly, New South Wales is powering ahead at present, well in front of the other states and territories, particularly South Australia.
The outperformance in the Stateometer is clearly evident in other notable economic indicators, as shown in the charts below.
Here’s the level of employment growth for each state and territory over the past three months.
And here’s the historic performance of each state and territory based on the parameters of Stateometer.
Although New South Wales put in a storming performance over the quarter – powered by residential construction, a falling Australian dollar and its dominant services sector – ANZ suggests this may be about as good as it gets for the state.
“While we expect an extended period of above trend growth, indications are that NSW may be approaching the top of the business cycle,” wrote Kirk Zammit and Cherelle Murphy, members of ANZ’s economics team.
“How the NSW economy adjusts to a cooling housing market and eventual slowdown in residential construction will be key to future growth momentum.”
Stymied by higher variable mortgage rates, greater restrictions on investor home loan lending and continued price growth, sentiment towards the state’s housing market, particularly Sydney, has softened in recent months. Auction clearance rates have weakened and numerous surveys suggest that many believe now is a time to be selling, rather than buying, in the Sydney property market.
Should that trend continue it will likely weigh on economic activity in the state, bringing it back to levels seen in other parts of the country.
Still, for the moment, New South Wales is flying high. Economic activity is strong and confidence is improving. Regardless of rivalries between the states and territories, that can only be a good thing for the overall Australian economy.
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